And the gloves have officially come off. If the Equal Employment Opportunity Commission (EEOC) thought that they would quietly provide new guidance (i.e. de facto legislation) to employers on criminal background checks and credit reports, the Wall Street Journal just sent the first shot across the bow.
As we have previously mentioned in some recent blogs, the EEOC is scrambling to get this guidance out by the end of the month. Why the rush? Check out WSJ’s editorial below. I imagine that this is just the beginning of the criticism that will come should the EEOC make wholesale changes to the current rules without seeking public comment and by passing these rules without a vote by our elected officials.
The Hiring Police
The Obama Administration’s favorite antidiscrimination tool is “disparate impact,” which relies on statistics to allege racial prejudice, regardless of intent. The Justice Department is using it to lean on banks to lend to more minorities, and now we hear the Equal Employment Opportunity Commission wants to use it to wield more power over business hiring.
Several sources tell us the Commission is working on policy guidance that would significantly limit companies’ use of credit and criminal histories in hiring under Title VII of the 1964 Civil Rights Act. A Commission spokeswoman declined to comment by email, “citing Agency practice barring public discussion of any policy that may or may not be in development.”
No wonder. We’re told that some members of the Commission want to declare that the use of credit checks and criminal histories may have a disparate impact on African Americans and Hispanics. Nothing like the prospect of being branded a racist to force companies to change their hiring practices to suit government’s bidding. Cue the trial bar.
The irony here is thick, given that credit checks were once viewed as a way to undermine the good ol’ boy network and base hiring decisions on facts, not race. Once upon a time, too, there was a distinction between discrimination based on race, which is rightly outlawed, and discrimination based on individual ability and responsibility, which is crucial to making good personnel decisions for colleagues and customers.
A company might use a credit check if a prospective employee would have a job that handles customer monies, for instance. A child-care center might want to know if an applicant has a criminal record. Both help companies make prudent hiring decisions.
The Commission would be overstepping its legal bounds if it proceeds. Under Title VII, the Commission has the ability to “issue, amend or rescind suitable procedural regulations,” not make substantive new rules. Congress expressly permitted the use of credit and criminal histories in hiring decisions under the 1970 Fair Credit Reporting Act and subsequent amendments.
The Commission has held public hearings on the general topic of background checks that include credit and criminal histories, but it hasn’t made its prospective guidance available for public comment or sought a review from the White House office that examines new regulations. The U.S. Chamber of Commerce earlier this month wrote to Cass Sunstein, chief of the White House Office of Information and Regulatory Affairs, asking for such a review. Good idea.
The Commission’s heightened interest in wielding disparate impact over business hiring may have something to do with the pending departure of Democratic Commissioner Stuart J. Ishimaru. Once he leaves, Democrats will lose their majority on the panel, and the chance of issuing this kind of guidance will diminish considerably.
The only certainty is that such a decision would further complicate business hiring at a time when America’s millions of jobless need more potential employers. The harder government makes it to hire or fire someone, the fewer people will be hired.
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